Given the following information for a currency straddle, Ask an Expert

Finance

Given the following information for a currency straddle using the Canadian dollar.:

Put and call option exercise price = $.75

Put option premium = $.014 per unit

Call option premium = $.01 per unit.

One option contract = C$50,000.00

a. What are the Break even points of the straddle? ________________

b. For the buyer of the straddle, calculate the profit/loss if the current spot price is $.78

c. For the writer of the straddle, calculate the profit/loss if the current spot price is $.78

d. Why do investors purchase currency straddles?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92653705

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